The Nasdaq marked its biggest intraday comeback since April as Wall Street bought the dip in some key technology and artificial intelligence stocks.
The Nasdaq Composite rose 0.1%. The Dow Jones Industrial Average fell 309 points, or 0.7%. The S&P 500 was down 0.1%.The yield on the 2-year Treasury note rose to 3.61%. The 10-year yield was up to 4.15%.
The Nasdaq at one point was down 1.9% on Friday as Wall Street continued to sell tech stocks. But the index reversed course and marked its largest reversal from an intraday low since April 7, according to Dow Jones Market Data. The S&P 500 was down 1.3% at its low before recovering to positive territory, but it let go of a gain in the final hour of trading.
Gene Goldman, chief investment officer at Cetera, told Barron’s he’s not so sure the current bounce back will be sustainable. He’s been telling advisors and clients over the past few weeks that he expects a 3% to 5% pullback in the market, with the possibility of a correction.
Goldman points to significant market concentration, high valuations in some areas, and weakening market breadth. He also points to signs of weakness from private economic data providers and a divide among the Federal Reserve officials on whether to cut rates in December.
“You take all this together, this is a recipe for the markets to have a sell-off,” he says. “And I think what, now if you look at the sell-off itself, what we’ve been telling our advisors, is that basically it’s a sell-off of the winners.”
He sees a buy-the-dip opportunity, and is upbeat about health care, financials, utilities, and real estate. He also is overweight small- and mid-caps. He expects stimulus in the economy next year, as well as eventual rate cuts that should lead to widening market breadth.
“What’s happened recently in the market isn’t even close to a tech wreck, but it may be a bit of a tech reckoning,” writes Daniel Skelly, head of Morgan Stanley’s wealth management market research and strategy team. “Given how much AI-related stocks have rallied in recent months, some retrenchment is perfectly normal. The recent volatility hasn’t altered the longer-term bullish case for the AI leadership.”
Skelly also likes health care, which he argues is still attractive despite a strong performance in recent months.
